Setif 2 University


Faculty of Law and Political

Sciences
Department of Law

First Semester Lessons

Option : Financial Institutions Law

Prepared by:
Dr.Benmoussa Nabil
 Lesson 1:

Definitions of the Financial Institutions Law

The law of financial institutions rules the process for the establishment, activity and
supervision of financial institutions, plus corrective measures for the same. For the purposes
of this law, the following mean:

1. Agency: premises within the country, belonging to a financial institution, banking or

non-banking, without separate juridical identity but which carries out directly, wholly or in
part, operations that are inherent to the activities of a company or supplementary premises of
the branch office in the country, of a financial institution, banking or non-banking, with its
registered office in another country;
2. Authorization: act by which the responsible authorities confer the right to carry out the
activity of a financial institution;
3. Foreign Exchange Office: non-banking financial institutions dedicated to dealing in
foreign currencies, buying and selling, in accordance with specific regulation;
4. Credit Co-operative: non-banking financial institutions authorized to receive deposits
from their associates and allowed to carry out credit operations with these associates, in
accordance with specific regulation;
5. Credit: act by which a banking or non-banking financial institution, acting on a fee-
paying basis, places or promises to place funds at the disposal of an individual or corporate
body against the promise to reimburse on the agreed date or contracts, in the interest of that
same entity, an undertaking upon a signature, such as a guarantee;
6. Sub-Office: supplementary premises of an agency located in the market of the same;
7. Deposit: contract under which an entity (the depositor) entrusts money to a banking
financial institution (the depositary), which has the right to dispose of it for its own business,
but is responsible for repayment of an identical amount, with or without payment of interest,
within the agreed deadline;
8. Affiliate: a company or institution standing in relationship to another company or
institution, designated by the parent company as dependent, it being considered that an
affiliate of an affiliate is also an affiliate of the parent company on which both depend;
9. Trade Name: name adopted by a financial institution, that suggests the activity that is
the corporate purpose of the company;
10. Financial Institutions: public or private law companies, that do business as financial
institutions, banking or non-banking, in accordance with this law;
11. Banking Financial Institutions: are banks, companies which have as their main
activity the receipt of deposits made by the public or other reimbursable funds, which it has
the right to dispose of for its own business;
12. Non-banking Financial Institutions: companies that are not banking financial
institutions;
13. Micro-credit: loans of small value to small entrepreneurs, to be defined by regulation;
14. Supervisory Entities: are the authorities that inspect, supervise, and control within the
financial system;
15. Qualified shareholding/restricted equity holding: a holding in a company, directly or
indirectly;
16. Controlling position: when the operations of a financial institution influence the
financial or exchange markets, independently of the reaction of its competitors, or of its
clients;
17. Controlling relation: the relationship between an individual or institution and a
company;
18. Group of companies: companies colligated among themselves in such a way Company
Law so characterizes them, independently of having their registered offices in the country or
in another country;
19. Venture capital companies: non-banking financial institutions engaged primarily in
the business of supporting and promoting investment and technological innovation in projects,
or in companies, through temporary participation in the respective capital, to the extent
permitted by law;
20. Factoring companies: non-banking financial institutions engaged exclusively in
factoring activities, by which one of the parties (the factor) buys from the other (client), short
term credits, resulting from the sale of products or from services to a third party (debtor), to
the extent permitted by law;
21. Real estate management & investment companies: non-banking financial institutions
engaged primarily in the business of renting property that they either bought or built, and
complementary services, including management of rented property belonging to others, to the
extent permitted by law;
22. Investment companies: non-banking financial institutions engaged exclusively in the
business of dealing in financial operations, namely, investing funds in the medium and long
term, buying shares in companies, and subscribing and acquiring securities, to the extent
permitted by law;
23. Leasing companies: non-banking financial companies engaged exclusively in the
business of negotiating contracts where the lessor agrees, for retribution, to grant to the lessee
the temporary use of property, movable or real estate, bought or built by indication of the
lessee, to the extent permitted by law;
24. Investment funds management companies: non-banking financial companies engaged
exclusively in the business of managing one or more, mutual investment funds in valuables, in
accordance with the applicable laws and to the extent permitted by law;
25. Holding companies: non-banking financial companies engaged exclusively in the
business of managing a portfolio of stocks and securities, namely company stocks, trying to
exert effective control over the company, and seeking to manage the equity of other
companies as an indirect way of practicing an economic activity, to the extent permitted by
law;
26. Foreign exchange broker companies: non-banking financial companies engaged
exclusively in the business of intermediation on the money and foreign exchange markets on
behalf of a third party, and associated services, to the extent permitted by law;
27. Mutual Funds companies: non-banking financial companies engaged exclusively in
the business of managing mutual funds dedicated to the certification of credits, also
designated as guaranteeing of receivables, funds that are independent patrimonies belonging
to several individuals, and institutions or companies, to the extent permitted by law;
28. Providers of payment services: non-banking financial companies authorized to
provide payment services;
29. Operators of the system of payments or clearing houses: non-banking financial
companies which have as their object the management of infrastructures or of central
procedures of subsystems and clearings, to the extent permitted by law;
30. Branch Office: the main office of a financial institution, banking or non-banking,
whose registered office is in another country or the main premises abroad, of a financial
institution, banking or non-banking, whose registered office is in a country without being a
corporate entity but assuming, directly, wholly or in part, the responsibility for operations
inherent to the activity of the company.

Lesson 2:
Activities of Financial Institutions
The financial institutions can be classified in banking financial institutions and non-banking
financial institutions.

Financial banking institutions can carry out the following operations:
- Receive deposits and other returnable funds from the public; 

- Carry out the function of intermediary in the settlement of payment 
operations; 

- Operate in insurance trading; 

- Promote the renting of safes and safekeeping of valuables; 

- Carry out operations of capitalization; 

- Carry out operations of leasing and factoring; 

- Extend guarantees and other undertakings; 

- Carry out credit operations; 

- Carry out operations in the capital markets through intermediation 
companies;
- Deliver payment services; 

- Make transactions, on its own behalf or on behalf of a third party, of 
money, financial and
foreign exchange market instruments; 

- Participate in stocks and debentures, issue and offering, and providing 
related services; 

- Consultancy, keeping, administration and management of the securities 
portfolio; 

- Sale and purchase of foreign notes and coins, or travelers’ cheques; 

- Participating in the capital of companies; 

- Other similar operations that the law does not forbid. 

The Central Bank shall be responsible for defining the terms and conditions for carrying out
the operations referred to in the previous number.